Colombia’s Outgoing Petro Administration Targets Permanent 19% VAT on Online Gambling in Final Tax Reform Push

Key Takeaways

• COP21.9tn Revenue Target: The bill seeks approximately US$5.4bn in additional funds for the 2027 budget through measures including a permanent 19 per cent VAT on online gambling.
• Shift to Ordinary Legislation: The proposal would embed the tax in standard law, resolving uncertainty after the original emergency decree was struck down by Colombia’s Constitutional Court.
• Turbulent History: Introduced temporarily in early 2025 under emergency powers tied to the Catatumbo security crisis, prior efforts to make the levy permanent failed in Congress.
• Lame-Duck Legislative Test: As President Gustavo Petro’s term winds down ahead of the 2026 presidential election, the bill faces long odds in a Congress that has previously withheld support.

Colombia’s government has introduced a new tax reform bill that would make the taxation of online gambling a permanent feature of the country’s fiscal framework. The proposal targets COP21.9tn (approximately US$5.4bn) in additional revenue for the 2027 budget and forms part of a broader package covering fossil fuels, tobacco, vaping products and online gambling.

Finance Minister Germán Ávila submitted the bill to Congress. According to reporting by G3 Newswire, Ávila described the fiscal challenges in stark terms during a Blu Radio interview.

Fiscal Pressures Behind the Permanent Tax Proposal

The Petro administration frames the reform as essential to strengthening public finances and narrowing Colombia’s fiscal deficit. Ávila stated verbatim: “We have fiscal problems that must be addressed adequately… and to do so, among other things, we require a series of tax reforms that ensure higher tax revenues.”

Online gambling is one piece of a larger revenue strategy. The 19 per cent VAT would move from its current uncertain footing to a settled position within ordinary legislation. This matters because temporary emergency powers have proven fragile.

From Emergency Decree to Constitutional Court Reversal

The tax’s path has been anything but smooth. The Petro administration first imposed the 19 per cent VAT on online gambling in early 2025 using emergency powers linked to the security crisis in the Catatumbo region. Subsequent attempts to anchor the measure in permanent legislation failed to pass Congress.

Later, Colombia’s Constitutional Court struck down the emergency framework itself. That ruling left the long-term status of the tax in limbo. The current bill directly addresses that gap by incorporating the levy into standard law, removing reliance on emergency authority.

This sequence illustrates a pattern of short-term fiscal tools colliding with legislative and judicial limits. For an outgoing government, converting those tools into enduring policy is both a priority and a test of remaining influence.

The Narrowing Window for a Lame-Duck Administration

Under Colombia’s constitution, Petro cannot seek immediate re-election. Voters will choose a new president in 2026, with the next administration taking office in 2027. That timetable compresses the window for passing major economic initiatives.

The gambling tax provision is one of the final significant pushes. Previous versions of the permanent tax measure could not secure sufficient congressional support. G3 Newswire notes that the latest proposal will again test lawmakers’ appetite for expanding the tax base while the current government remains in office.

From a structural standpoint, this is a classic lame-duck dynamic. Political capital declines, competing priorities multiply, and bills that once seemed viable can lose momentum. The government’s ability to build coalitions around fiscal reform will determine whether the 19 per cent VAT becomes a permanent feature or remains in limbo.

Risks of Renewed Legislative Failure

The primary risk is repetition of past outcomes. If the bill fails to advance, online gambling operators will continue operating under regulatory uncertainty. That uncertainty itself carries commercial costs: deferred investment, cautious expansion plans, and potential reversion to gray-market activity that the 19 per cent VAT was meant to bring into the licensed framework.

There is also the counterargument that layering additional permanent taxation on a relatively young regulated market could pressure operator margins at precisely the moment when legal channels need to demonstrate clear advantages over unlicensed alternatives. While the government’s revenue goals are explicit, the downstream effects on market stability and long-term compliance remain unaddressed in the current proposal.

What This Signals for Regulated iGaming in Colombia

The bill’s fate will clarify whether Colombia is moving toward a stable, fully legislated iGaming environment or whether fiscal needs will continue to outrun durable policy design. Operators and investors should track the congressional debate with precision, because permanence, if achieved, offers the regulatory predictability that licensed markets require to scale responsibly.

At the same time, the measure underscores a broader tension in emerging LATAM jurisdictions between immediate budget imperatives and the patient work of building competitive, sustainable regulated sectors. Client-partners navigating this space would be wise to model both scenarios—passage and failure—while maintaining flexibility in their Colombia strategies.

The coming months represent an inflection point. How lawmakers respond will shape not only tax receipts but the credibility of the regulated online gambling framework itself.